Income inequality: 95/20 ratio

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Annual household income at the 95th and 20th percentiles (in 2014 dollars), and the ratio of the 95th to the 20th percentile (the 95/20 ratio). A household income percentile is a level of income below which a given percentage of households fall. For example, 95 percent of households earn below the 95th percentile and 20 percent of households earn below the 20th percentile. The 95/20 ratio is a useful measures income inequality, with a higher ratio indicating greater inequality. Data for 1980 through 2000 are based on surveys in those years but reflect income from the year prior, while data for 2012 represents a 2008-2012 average, and data for 2014 represents a 2010-2014 average. For more information, see the data and methods document. | National Equity Atlas Data & Methods: Technical Documentation

United States

Breakdown:

Household income, 95th and 20th percentile:

Is growth being broadly shared?

Why it matters

There is a growing consensus that inequality has a negative impact on economic growth and prosperity. Recent economic research finds that inequality hinders economic growth, and that greater economic inclusion leads to more robust and sustained growth.

Washington DC’s EITC Lifts the Incomes of Low-Wage Workers

Tax policy is an important tool for reducing inequality and the Earned Income Tax Credit (EITC) plays a major role in boosting incomes and encouraging work for low-income working families. 25 states, along with the District of Columbia, New York City, and Montgomery County offer their own EITCs. Washington, DC’s EITC is the most generous in the nation. It offers 40 percent of the federal credit (while some states offer as low as 10 percent), it is refundable (if the credit is larger than your tax obligation, you get it back in cash), and it was recently expanded to reach childless workers (workers without children as well as non-custodial parents), a large share of whom are not typically eligible. Learn more.